Phoenix Company's 2017 master budget included the following fixed budget report. It is based on an expected production and sales volume of 15,000 units. PHOENIX COMPANY Fixed Budget Report For Year Ended December 31, 2017 ales Cost of goods sold $3,150,000 $930,000 240,000 60,000 Direct materials Direct labor Machinery repairs (ariable cost) Depreciation-Plant equipment (straight-line 315, 000 Utilitie $60,000 i vriable) Plant management larie 210,000 190,000 1,945, 000 1,205, 000 Gross profit Selling expenss Packaging Shipping Sales salary (Eixed annual amount) 75,000 105,000 235,00015,000 General and administrative expenses 100,000 241,000 85,000 Advertising expense alaries 426,000 $ 364, 000 Entertainment expense Income from operations Required 1&2. Prepare flexible budgets for the company at sales volumes of 14,000 and 16,000 units and classify all items listed in the fixed budget as variable or fixed. PHOENIX COMPANY Fixed Budget Report For Year Ended December 31, 2017 Flexible Budget Variable Flexible Budget for: Total Fixed Units Sales Unit Sales of of 14,000 Amount per Unit Cost 16,000 Variable costs 0.00 Fixed costs 0 S 3. The company's business conditions are improving. One possible result is a sales volume of 18,000 units. The company president is confident that this volume is within the relevant range of existing capacity. How much would operating income increase over the 2017 budgeted amount of $364,000 if this level is reached without increasing capacity? PHOENIX COMPANY Forecasted Contribution Margin Income Statement For Year Ended December 31, 2017 18,000 Sales (in units) Contribution margin (per Contribution margin Fixed costs Operating income 15,000 Operating income increase Operating income decrease 4. An unfavorable change in business is remotely possible; in this case, production and sales volume for 2017 could fall to 12,000 units. How much income (or loss) from operations would occur if sales volume falls to this level? (Enter any loss with minus sign.) PHOENIX COMPANY Forecasted Contribution Margin Income Statement For Year Ended December 31, 2017 Sales in units) Contribution margin (per unit) Contribution margin 15,000 12,000 Operating income (loss)